Publication: Financial Mail Issued: Date: 2006-02-10 Reporter: Peter Honey Reporter: Reporter:

Shauket Fakie - A Trail that has Veered between Darkness and Light

 

Publication 

Financial Mail

Date 2006-02-10

Reporter

Peter Honey

Web Link

www.financialmail.co.za

 

Arms deal controversy clouds AG's fine achievements

Next week, February 15, auditor-general (AG) Shauket Fakie pursues what could be the last opportunity to repair his damaged credibility *1 over the investigation into SA's controversial multibillion-rand arms deal.

It will take the form of an application to the court of appeal in Bloemfontein against Fakie's conviction for contempt of court. This was for allegedly withholding documents that a high court judge had ordered him to hand over to businessman Richard Young's military technology company, CI, under the Promotion of Access to Information Act.

Young, who maintains he lost a bid for a lucrative arms deal subcontract because of corruption, has long claimed that Fakie, who led the arms deal probe, excised incriminating details *2 from the final report under executive pressure *3 - which is why Young sought, and won, access to the original report drafts and working documents. Some of those documents have pointed to executive vetting of the report prior to its release; the full extent or effect of that vetting, though, has yet to emerge *4.

In an interview this week, Fakie (52) repeated earlier denials that he had taken part in a cover-up, saying the details left out of the final report did not materially change its substance *5.

"I know from the bottom of my heart that I have done absolutely nothing wrong," he said. "I did the best I could with the arms deal and put all the facts on the table based on the information at my disposal at the time *6."

He also insisted he had not deliberately defied the court order. He maintains the court was not entirely clear about the documents required *7. Besides, he adds, he was "ethically and professionally" *8 bound to protect the anonymity of people who had provided him with information on the basis of confidentiality.

"We felt it would be improper to just hand over those documents. We would let the courts decide. If a court ordered me to hand them over I would do so ; then I would not be contravening my professional ethics and quality."

Young is unimpressed. Despite having won possession of some 20 000 pages of drafts, working documents and notes from Fakie's office, he insists that important information remains hidden *9. "We're still doing a detailed analysis ," he says. "But already one can see that it's the sensitive things that have been withheld."

However Fakie's appeal turns out - whether he is acquitted or must serve a 30-day sentence for contempt - it is bound to stir up the issue that has plagued him for most of his tenure as SA's chief bookkeeper. Otherwise it has been a tenure distinguished by achievement, respect and prestige - which will expire on December 1, the date in 1999 when he took up his seven-year, nonrenewable presidential appointment *10.

"Overall he has been a good AG," says Judith February, senior analyst for independent democracy monitor Idasa. "His coming in with the implementation of the Public Finance Management Act [PFMA, which tightened state financial controls] and his persistent reporting of underspending in government did a lot to focus attention on performance."

She points out, though, that an AG can be truly effective only within the broader context of government. "Other role-players - for instance, parliament's public accounts committee (Scopa) and departmental managers - need to take up what the AG is saying," she says. "Often, as in the case of Scopa *11, they haven't done that."

Fakie himself considers highlights of his term to include the transformation of the AG's office from a typical state bureaucracy to a more professional and service-orientated auditing agency, and the office's involvement in international auditing - it audits the UN and has balanced the books of the World Health Organisation and the UN Industrial Development Organisation *12.

The AG's office employs about 1 500 people, of which about 120 are qualified chartered accountants (CAs) - a considerable improvement on the situation in 1999, when about 10 of the total staff complement of 1 250 were CAs. Fakie says a further 600 trainee accountants are on the payroll and should complete their qualifications over the next few years.

"Within three to five years I expect at least half the staff of the office will be qualified accountants," he says.

Last week Fakie released an annual general audit report on national government that found unauthorised, irregular and wasteful spending amounting to R84m for 2004/2005. His first general report, for 1999/2000, found R151m of unauthorised spending, which nominally at least suggests an improvement over the past six years.

But Fakie says it's not fair to make a direct numerical comparison because stricter financial control measures, such as the PFMA, have raised reporting standards in recent years. Also, the rise in spending on social grants and other entitlements for the poor has increased fiscal management pressures on state departments concerned, sometimes forcing them to engage in unauthorised payments if budgets become strained.

"In the context of total government expenditure of R135bn-R140bn, R84m in unauthorised spending is not a significant amount *13. It used to be significantly worse - up to 5% in some cases. So in that sense, government's financial management has improved."

But Fakie remains critical of state departments' internal controls and the lack of skills and capacity - "that's why you find many departments come short in efficient public service delivery".

Fakie says that, apart from the arms deal controversy, his one other regret is that he will not have time before retirement to raise the level of competence of his office to the level he hoped for when he started the job. "Some of the challenges and inherent problems were far more deeply embedded than we thought at first," he says.

One function that Fakie would like to see his office improve is "performance auditing", in which the AG evaluates a government department's ability to deliver "value for money", as opposed to simply measuring its ability to manage its finances in isolation from service delivery. The AG devotes only 7% of its resources to performance audits; Fakie would like to raise that to between 12% and 15% of resources.

"It's something I shall leave behind for my successor to achieve," he says.

Fakie says he does not know what he will do when he moves on from his current job. A more important question is who will replace him.

The retirement of public protector Selby Baqwa - one of Fakie's two co-investigators of the arms deal - in 2002 led to a significant weakening of the public protector's oversight role. Similarly, the resignation of national director of prosecutions Bulelani Ngcuka - the third joint investigator - has left the Scorpions special investigations unit under a political cloud.

As government intensifies its fight against maladministration and corruption , the function of key oversight agencies, such as the AG, will become ever more important. *14
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Shauket Fakie - Proud of Improvements

With acknowledgements to Peter Honey and Financial Mail.



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*1  Harmless Edits
Business Day, 2003-05-22

*2  This can be determined objectively by comparison of the draft joint report and the final joint report.

*3  This can be determined objectively by comparison of the notes taken in the meeting with MINCOM to review the draft joint report and the insertions and deletions in the final joint report.

*4  It has indeed fully emerged, it is just that no one is interested anymore.

*5  The changes from the draft reports to the final joint report are so stark and so material that there would be far stronger grounds to institute an independent judicial commission of enquiry than was the case in the Mac and Moo Show.

Furthermore, this stooge claimed in Parliament on at least three occasions, as well as in television press conferences, that there were no changes other than as enhancing "user-friendliness" of the final joint report. These averments were blatant lies and should have resulted in investigation and impeachment.

*6  More lies.

6.1  Documents date-stamped six months prior to the release of the joint report by the Office of the AG show them to be in possession of breath-takingly incriminating evidence of fraud and conspiracy to commit fraud involving the corvete combat suite contract.

6.2  On 23 September 2003, some two years after the release of the final report, the senior counsel for the AG, Advocate A.M. Meyer SC, finally admitted "that the procurement process....fell short of the constitutional prescripts of fairness, equitability and transparency".

6.3  On 24 August 2001, some three months before the release of the final report, the joint investigation team issued an affidavit in support of searches and seizures of Schabir Shaikh's and Thomson-CSF's premises in Durban, Midrand, Pretoria, Paris and Port Louis, Mauritius. Nearly all of the averments of criminality involving Shaikh, Thomson-CSF and the benefactor J.G. Zuma were found to be true beyond a reasonable doubt in the Durban High Court in 2005, many will be re-visited in 2006.

Either there was no joint investigation, or Fakie never did his job properly.

In any case, much of the material relevant to the Shaikh, Nkobi, Thomson-CSF, ADS, J.G. Zuma matter was provided directly to the AG's own investigators. None of this sees the light of day in the joint report.

*7  This was a deliberate, opportunistic and self-serving interpretation of Judge Willie Hartzenberg's court order standing alone from the judgment. Standing together with the judgment, the AG's senior counsel Advocate Gilbert Marcus SC, one of the top practitioners of administrative law in the country, agreed that the order was indeed clear. Judge Annemarie de Vos concurred with Judge Hartzenberg.

*8  In opposition to a court order -that's contempt.

*9  Important information remains undelivered - that's further contempt.

*10  Protect the person that appointed one.

*11  Fakie also treated SCOPA with contempt.

*12  When the country is almost collapsing due to corruption at all three levels of government, its primary constitutional watchdog is self-actualising in foreign climes.

*13  It's just that the rest hasn't been exposed. The ANC government would not have made corruption one of their primary pillars of policy for the upcoming elections if national corruption was limited to 0,06% of government expenditure.

*14  Indeed - but that's almost a tautology.

It is time for a trial that will veer darkness into light.

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